Question: I'm getting divorced and I have a question about a 529 plan. We want to transfer the plan from my wife to me. My wife helped to fund the plan but now we agreed that I should handle all the finances for my daughter's college. My daughter wants to go to Kennesaw State University, University of Georgia or Georgia Tech. She wants to either by an engineer, lawyer, veterinarian or writer. So she really isn't sure what she wants to do.
Our marriage hasn't been good since my wife admitted that she was a lesbian. I caught her watching porn with a female friend and I confronted her. And I arranged for an intervention with our pastor. After all that, she admitted that she wanted to see other ladies.
So now we're talking about a divorce and we have that question about the 529 plan because my daughter is only a couple of years from attending college.
I'm writing to ask if we can transfer the plan from one spouse to another and how we should do that.
J.M. in Roswell, GA
Answer: Named after Section 529 of the Internal Revenue Code, a 529 Plan is an education savings plan. It can be operated by a state or educational institution and is designed to help families save money for future college costs. And with the escalating costs of higher education, millions of people are taking advantage of these savings vehicles.
Federal law provides for two types of 529 college savings plans: pre-paid tuition plans and college savings plans. Each state and the District of Columbia sponsor at least one type of 529 plan. Additionally, some private colleges and universities sponsor a pre-paid tuition plan.
The 529 plan can be transferred between divorcing spouses. However, any transfer must be approved by the 529 plan administrator. The administrator can deny the transfer. Usually, the transfer is denied because the administrator has an issue with the transferring language. Sometimes the administrator will insist that its specific language be used to effectuate a transfer of ownership. This is true whether it is a contested divorce or an uncontested divorce.
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